DoD's $245.7M Intelligent Munitions System contract awarded to Textron Systems Corporation shows fair value

Contract Overview

Contract Amount: $245,737,502 ($245.7M)

Contractor: Textron Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2006-06-29

End Date: 2011-09-30

Contract Duration: 1,919 days

Daily Burn Rate: $128.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: INTELLIGENT MUNITIONS SYSTEM - SYSTEM DEVELOPMENT AND DEMONSTRATION&LOW RATE INITIAL PRODUCTION

Place of Performance

Location: WILMINGTON, MIDDLESEX County, MASSACHUSETTS, 01887

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $245.7 million to TEXTRON SYSTEMS CORPORATION for work described as: INTELLIGENT MUNITIONS SYSTEM - SYSTEM DEVELOPMENT AND DEMONSTRATION&LOW RATE INITIAL PRODUCTION Key points: 1. Contract awarded via full and open competition, suggesting a competitive pricing environment. 2. The contract's duration of 1919 days indicates a long-term commitment to system development and production. 3. Textron Systems Corporation, the sole awardee, has a significant track record in defense contracting. 4. The contract type (Cost Plus Incentive Fee) aims to balance contractor performance with cost control. 5. The contract's value of over $245 million places it within the upper tier of defense procurements. 6. The North American Industry Classification System (NAICS) code 332993 points to ammunition manufacturing. 7. The contract was awarded by the Department of the Army, a major component of the DoD. 8. The contract's performance period spans from 2006 to 2011, providing historical context for spending.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific performance metrics or comparable systems. However, the Cost Plus Incentive Fee (CPIF) contract type suggests an attempt to manage costs while incentivizing performance. The total obligated amount of $245.7 million over approximately five years indicates a substantial investment in developing and producing an intelligent munitions system. While not explicitly stated, the pricing structure within a CPIF contract typically involves a target cost and fee, with adjustments based on actual costs and performance outcomes. Further analysis would require access to the specific incentive targets and final cost reconciliation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit proposals. The presence of two bids suggests a moderate level of competition for this specialized defense system. While two bidders is better than a sole-source award, it may not represent the most robust competition possible for a contract of this magnitude and technical complexity. The level of competition can influence price discovery, with more bidders generally leading to more competitive pricing.

Taxpayer Impact: A full and open competition, even with two bidders, is generally favorable for taxpayers as it provides a basis for comparing different technical approaches and pricing structures, potentially leading to better value.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the U.S. Army, which will receive advanced munitions capabilities. The contract supports the development and initial production of an 'Intelligent Munitions System,' implying enhanced targeting, guidance, or operational features. The geographic impact is primarily within the United States, with potential implications for defense industry employment in Massachusetts, where Textron Systems Corporation is located. The contract likely supports a specialized workforce within Textron Systems Corporation, including engineers, technicians, and manufacturing personnel involved in advanced ordnance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee contracts can sometimes lead to cost overruns if not managed rigorously.
Limited competition (two bidders) might mean less downward pressure on pricing compared to a more crowded field.
The long duration of the contract could present risks related to technological obsolescence or changing military requirements.

Positive Signals

Awarded through full and open competition, indicating a structured procurement process.
The CPIF structure incentivizes contractor performance, aligning Textron's goals with the Army's.
The contract addresses a critical defense capability, suggesting strategic importance and potential for technological advancement.

Sector Analysis

The defense sector, particularly the segment focused on munitions manufacturing, is characterized by high technological barriers to entry and significant government investment. Contracts like this are crucial for maintaining a technological edge and ensuring readiness. The market for advanced munitions is dominated by a few large defense contractors. Spending benchmarks for similar system development and production contracts can vary widely based on complexity, quantity, and technological sophistication. This contract falls within the scope of specialized ordnance production, a critical sub-sector of defense manufacturing.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb: false'. The prime contractor, Textron Systems Corporation, is a large defense entity. While large prime contracts often include subcontracting goals for small businesses, the specific details of such subcontracting opportunities are not provided in this data. The absence of a direct set-aside means small businesses would likely participate as subcontractors to Textron, rather than as direct awardees of this prime contract.

Oversight & Accountability

Oversight for this Department of Defense contract would typically involve the Defense Contract Management Agency (DCMA) for day-to-day oversight of performance, cost, and schedule. The Inspector General of the Department of Defense would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance data and cost breakdowns are often considered sensitive.

Related Government Programs

Advanced Munitions Programs
System Development Contracts
Ordnance Manufacturing
Department of the Army Procurement
Cost Plus Incentive Fee Contracts

Risk Flags

Long contract duration may increase risk of obsolescence.
CPIF contracts require careful monitoring to prevent cost overruns.
Limited competition could impact price competitiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $245.7 million to TEXTRON SYSTEMS CORPORATION. INTELLIGENT MUNITIONS SYSTEM - SYSTEM DEVELOPMENT AND DEMONSTRATION&LOW RATE INITIAL PRODUCTION

Who is the contractor on this award?

The obligated recipient is TEXTRON SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $245.7 million.

What is the period of performance?

Start: 2006-06-29. End: 2011-09-30.

What is Textron Systems Corporation's track record with similar DoD contracts?

Textron Systems Corporation has a substantial history of contracting with the Department of Defense, particularly in areas related to advanced weapons systems, unmanned systems, and armored vehicles. Their portfolio includes numerous development and production contracts for various branches of the military. For instance, they have been involved in programs like the Shadow Tactical Unmanned Aircraft System and various munitions development efforts. Their experience suggests a deep understanding of DoD procurement processes, technical requirements, and program management challenges. Analyzing their past performance on similar cost-plus contracts would provide further insight into their ability to manage complex projects within budget and schedule constraints, though specific details on past cost variances or performance issues would require deeper investigation into individual contract histories.

How does the value of this contract compare to other intelligent munitions system procurements?

The $245.7 million awarded to Textron Systems Corporation for the Intelligent Munitions System represents a significant investment. However, direct comparisons are difficult without knowing the specific capabilities and scope of 'intelligent' features. Other advanced munitions programs, such as guided missile development or precision-guided munitions production, can range from tens of millions to billions of dollars depending on the technology's maturity, the number of units procured, and the complexity of the system. For example, large-scale production runs of established guided munitions might see higher total contract values over time than a system development and initial production contract for a newer, more specialized capability. This contract appears to be in the mid-to-high range for a system development and initial production phase for a novel munitions technology.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for munitions development?

CPIF contracts aim to incentivize contractor efficiency by establishing target costs and fees, with adjustments based on actual costs and performance. For munitions development, key risks include: 1) **Cost Overruns:** If the target cost is set too high or if unforeseen technical challenges arise, the final cost could exceed projections, even with incentives. 2) **Inadequate Incentive Structure:** If the incentive targets (e.g., for performance, schedule, or cost reduction) are not sufficiently motivating or are poorly defined, the contractor may not be adequately driven to achieve optimal outcomes. 3) **Scope Creep:** The 'development' aspect carries inherent uncertainty. Changes in requirements or the discovery of new technical needs can lead to contract modifications and increased costs. 4) **Quality Control:** While incentives can drive performance, ensuring consistent quality and reliability in munitions production under pressure to meet cost targets requires robust oversight. The government must carefully monitor expenditures and contractor performance to mitigate these risks.

What was the historical spending trend for this specific Intelligent Munitions System program prior to this award?

The provided data pertains to a single definitive contract awarded on June 29, 2006, with an end date of September 30, 2011, totaling $245,737,502.41. This suggests that this award represents a significant portion, if not the entirety, of the initial development and low-rate initial production funding for this particular 'Intelligent Munitions System' under this specific contract vehicle. Without access to other contract awards or program budget documents for the same system under different identifiers or from different time periods, it's difficult to establish a 'historical spending trend' prior to this specific award. This contract likely initiated or significantly advanced the program's lifecycle from concept to early production.

How does the contract's performance period (2006-2011) inform its relevance today?

The contract's performance period of 2006-2011 means the system development and initial production occurred over a decade ago. In the rapidly evolving field of defense technology, particularly munitions, systems developed during this era may be subject to obsolescence or have been superseded by newer technologies. While this contract was crucial for its time, its relevance today lies more in understanding the historical investment in advanced munitions capabilities and the evolution of Textron Systems Corporation's role in this sector. The technologies and requirements that drove this contract may differ significantly from current military needs and technological frontiers. Therefore, while historically important, the direct operational relevance of the specific systems produced under this contract today would need separate evaluation.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15QKN06R0100

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Textron Inc (UEI: 001338979)

Address: 201 LOWELL ST, WILMINGTON, MA, 01887

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $372,469,085

Exercised Options: $372,469,085

Current Obligation: $245,737,502

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline